1. Sales

2016 Actual Sales

2017 Estimated Sales

Nov

Dec

Jan

Feb

Mar

Apr

May

Units

7,835

7,970

7,450

7,090

8,320

9,070

10,120

The selling price per unit has remained constant for the past year and is expected to

remain unchanged throughout the first quarter of 2017 at an amount of $68.99

2. Cash Collection Policy

Total sales consist of the following:

Cash sales:

5%

Credit sales:

95%

Credit collections are as follows:

In the month following the month of sale:

75%

In the second month following the month of sale:

25%

The Company does not have any bad debts.

3. Production Policy

The Company's policy is to produce during each month, enough units to meet the current

month's sales as well as a desired inventory at the end of the month which should be

equal to 23% of next month's estimated sales. On December 31, 2016, the finished

goods inventory consisted of 1,714 units at a cost of $50.40.

4. Direct Materials Purchasing Policy

Each month the Company purchases enough direct materials to meet that month's

production requirements and an amount equal to 25% of the next month's estimated

production requirements. Each unit of finished product requires 2.83 pounds of direct

materials at a cost of $1.38 per pound. On December 31, 2016, the direct materials

inventory consisted of 5,213 lbs. at a cost of $1.38.

Payments are made as follows:

In the month of purchase:

80%

In the following month the balance:

20%

The accounts payable balance of $5,755.15 as of December 31, 2016, represents 20% of

purchases made in December 2016 to be paid in January 2017.

5. Direct Labor Costs

Direct labor hours required per unit of finished product:

1.75

Average rate per direct labor hour:

$12.25

6. Factory Overhead

The Company applies variable factory overhead cost at the rate of 120% of direct

labor cost and fixed factory overhead on the basis of the number of direct labor hours.

The company has the following fixed overhead expenses per month:

Factory supervisor's salary

$54,000.00

Factory rent

6,000.00

Factory insurance

6,500.00

Depreciation of factory equipment

600.00

All factory overhead costs, except depreciation, are paid for in cash during the

month in which they are incurred.

7. Selling and Administrative Expenses

Variable selling expenses are:

Freight out

$0.80

per unit

Sales commissions

1%

of sales

Fixed selling and administrative expenses per month are:

Salaries

$8,700.00

Rent

1,800.00

Advertising

150.00

Insurance

250.00

Depreciation (excluding depreciation of

computer to be purchased at the end

of January 2017

10,050.00

8. Income Taxes

Combined tax rate is 30% of Income before taxes computed at the end of the

quarter ending March 31, 2017 , payable in the second quarter.

9. Capital Expenditures

The Company expects to buy a new computer on January 31, 2017, for use in the sales and

administrative offices at a cost of $180,000.00, which will be paid in cash. Monthly

depreciation expense will be an additional $3,000.00 .

10. Financing Policy

On March 31, 2017, the Company is scheduled to pay $300,000.00 , of the long-term notes

payable plus interest expense for the first quarter at a rate of 12%

With respect to short-term borrowing, the Company's policy is to borrow at the beginning

of a month with an anticipated cash deficiency. A minimum cash balance of $25,000.00 is

required of the end of each month. The Company repays the principal of such short-term

borrowing at the end of the first following month to the extent of anticipated excess cash.

Interest must be paid the following month at a rate of 12%. Borrowing and principal

repayments are made in multiples of $1,000.00 .

11. Investing Policy

Investments earn interest of the rate of 6% per annum which is credited to our Checking

account by the bank at the beginning of the following month. You may assume that the balance

of Marketable Securities at December 31, 2016, was outstanding throughout the entire month.

12. General Information

Use proper rounding and show two (2) decimal places of accuracy on dollar amounts.

Round up and show whole amounts on all other figures.

~~~~~NEED HELP WITH BUGETED INCOME STATEMENT~~~~

BALANCE SHEET
DECEMBER 31, 2016
ASSETS
Cash					$25,711.00
Marketable Securities					20,000.00
Accounts Receivable					650,735.24
Interest Receivable					-
Inventories:
Direct Materials				$7,193.94
Work in Process				-
Finished Goods				86,385.60	93,579.54
Total Current Assets					790,025.78
Property, Plant and Equipment				844,200.00
Less: Accumulated Depreciation				(318,600.00)
Total Property, Plant and Equipment					525,600.00
Total Assets					$1,315,625.78
LIABILITIES AND STOCKHOLDERS EQUITY
Accounts Payable					$5,755.15
Interest Payable					-
Income Tax Payable					-
Short Term Borrowings					-
Total Current Liabilities					5,755.15
Long-Term Notes Payable					436,000.00
Total Liabilities					441,755.15
Common Stock ($5.00 Par)				$475,000.00
Paid in Capital				100,000.00
Retained Earnings				298,870.63
Total Stockholders Equity					873,870.63
Total Liabilities and Stockholders Equity					$1,315,625.78